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Anna Mae Yu Lamentillo

Apr 8, 2022

Elon Musk’s Starlink in PH

Digital technology played a key role at the height of the global health crisis caused by COVID-19. As the pandemic disrupted our way of life, the need to innovate became more crucial and urgent. Digitalization became synonymous to new normal.

The pandemic caused the great pivot to digital transformation. Businesses operated on work-from-home or hybrid setup, while essential industries that had to maintain on-site operations adopted technologies such as cashless payments and other online transactions to minimize physical contact.

Schools went online. Meetings were held virtually. Even medical checkups shifted to teleconsultation.

For a developing country like the Philippines, the pandemic also further emphasized the need to immediately address inadequate ICT infrastructure, which has widened the digital divide.

The National ICT Household Survey (NICTHS), which was conducted by the Department of Information and Communications Technology (DICT) and the Philippine Statistical Research and Training Institute, revealed that cellular signal reaches 92 percent of surveyed barangays, with 3G technology prevalent in rural areas; over 90 percent have 24/7 electricity supply; and about 91 percent have a cellular signal.

However, when it comes to access to free Wi-Fi, only 12 percent of all the barangays have access. About 29 percent of barangays have a fiber optic cable (FOC) network installed in their communities, mostly in urban areas. One in five (20%) barangays have no internet service providers (ISPs).

On the household level, while 95 percent have access to electricity, only 18 percent of households in the country have an internet connection. Majority of households that do not have an internet connection cited high cost and unavailability of internet service in their area as main barriers to access.

THE AUTHOR (center) meets with Starlink Executives Ryan Goodnight (second from left), and Rebecca Hunter (second from right), together with Brian Poe Llamanzares (right), and Ramon Garcia (left).

Starlink in PH

The entry of Elon Musk’s Space Exploration Technologies Corp (SpaceX) to the Philippines will be a gamechanger. With its Low Earth Orbit (LEO) satellite network constellation called Starlink, it can improve internet access in unserved and underserved areas in the country.

As of mid-2021, Starlink is comprised of over 1,600 satellites. But the company aims to have as many as 42,000 satellites to be able to deliver high-speed, low-cost internet to remote regions across the globe.

The signing of the amended Public Service Act (PSA)—which allows up to 100% foreign ownership of public services in the country—was actually a main deciding factor for the company’s entry to the local market since all of SpaceX’s technologies are proprietary.

In assisting SpaceX in its planned establishment in the country, the Department of Trade and Industry (DTI) emphasized that this technology will further capacitate micro, small, and medium enterprises (MSMEs), facilitate online learning, e-commerce and fintech.

SpaceX’s Starlink will augment and complement existing broadband capacities, enabling faster broadband speed and better connectivity, particularly in areas where connectivity has been difficult or impossible.

SpaceX is targeting to deploy three gateways in the first phase of their launch in the Philippines, which is set to be the first in Southeast Asia to avail of such technology.

What are PPPs? What is its role in government projects? Are PPPs privately owned?

To put it simply, PPP or Public-Private Partnership is, as the term explicitly states, an agreement between the government and a private company to undertake a project.  PPP is not the project itself. It is a funding scheme by which a project is implemented.

The Public-Private Partnership Center (PPPC) defines it as a contractual agreement between the government and a private firm targeted towards financing, designing, implementing and operating infrastructure facilities and services that were traditionally provided by the public sector. It is a mechanism to distribute project risks to both public and private sector.

On the part of the government, the PPP addresses limited funding sources for local development projects. Since the private company allocates the financial resources for a certain project, public funds can then be allocated for other local priorities. The project that is the subject of the PPP is structured in such a way that the private sector gets a reasonable rate of return on its investment.

In this concession agreement, the government confers to the private sector the right to build and operate a facility, example an expressway, as well as the right to collect toll for a predetermined period of time. Once the duration of the concession has ended, control (including operations and maintenance) of the infrastructure reverts back to the State. There is no full divestiture of ownership in PPP.

Legal Basis of PPPs in PH

Public Private Partnerships in the Philippines date back as early as 1986, when Proclamation No. 50 created the Asset Privatization Trust (APT) and the Committee on Privatization. It has evolved since with the enactment of several laws, including RA 6957 or the Build-Operate-Transfer Law in 1991, RA 771815 and Memorandum Order No. 16616 in 1993, Administrative Order 103 in 2000, Executive Order 144 in 20021, Executive Order No. 819 in 2010 and Executive Order No. 13620 in 2013.

The current structure of PPP in the Philippines has been improved to streamline and clarify processes, including procedures for managing unsolicited proposals, joint venture agreements, and appointment of probity advisors for PPP procurement, among others.

Projects under PPP

According to the PPPC, there are at least 17 PPP projects in the Philippines under implementation—15 of which are solicited (project was identified by the implementing agency or government unit) and two are unsolicited (the private sector project proponent submits a project proposal to an implementing agency without a formal solicitation from the government).

In the Department of Public Works and Highways, there are at least 26 projects at various stages. One of the project is Skyway Stage 3 —an 18-km expressway spanning from Buendia in Makati to Balintawak in Quezon City.

Since the project was started until November, 2017, accomplishment on right-of-way activities was almost nil. For instance, site possession for the entire alignment was only at 8.64%. Before the issuance of Department Order 65, only Section 1 had substantial right-of-way acquisition, which was only at 34.85%. No right of way was acquired for Section 2A and 2B. Section 3 and Section 4 were only at 2.86% and 5.5% respectively. Relocation of the 47 National Grid Corporation poles and 1,312 Meralco poles only started in May, 2017.

It was clear that the original alignment that was proposed had to be revised. In May, 2017, DPWH Secretary Mark Villar received a proposal from San Miguel Corporation to realign Section 2B to utilize the San Juan River alignment. The Memorandum of Agreement was signed on October 25, 2018, which included the construction of an interconnection structure between Metro Manila Skyway Stage 3 and the NLEX SLEX Connector, an 8-kilometer elevated 4-lane toll expressway from NLEX Harbor Link Segment 10 in C3 Road, Caloocan City, to PUP Sta. Mesa in Manila.

Twelve months later, civil works construction for the main span of Skyway Stage 3 is completed. By December, travel time from NLEX to SLEX will be reduced from 2 hours to only 30 minutes. Makati to Quezon City will only be 20 minutes.

Hybrid PPPs

Under the administration of President Rodrigo Duterte, the government supported another type of modality — the hybrid PPP to complement the traditional PPP structure in the government’s “Build, Build, Build” program. Under this modality, the government builds and finances infrastructure projects and later on bids out the operation and maintenance aspects to the private sector.

So far, the government has two hybrid PPP projects—the Clark International Airport and the New Bohol Airport.

All infrastructure projects under the “Build, Build, Build” program are financed by three implementation modalities — PPP, national government financing, or official development assistance (ODA).

To reiterate, PPP is a funding scheme, a financing modality. It’s not BBB vs PPP, because Public-Private Partnership is part of “Build, Build, Build.”

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